Creating New Businesses
isshinbo’s R&D activities, the basis for every aspect of corporate
operations, are oriented toward the development of originaltechnologies that can obtain a unique position in the marketplace. The
key phrases are “adequate target-setting” and “speed.”
Our new R&D Center, which began operations in April 2000, serves as
the core of Nisshinbo’s R&D operations and the base for new businesscreation. Our R&D activities concentrate on the development of “original,
superior technologies” by focusing on three areas that offer substantial
growth potential: “Electronics/Information Technology,”“Energy/Ecology,” and “Life Sciences.” Basedon our three-year management plan, we willchannel considerable management resources
into R&D operations in order to ensure theexcellence of its facilities and staff training. We
will emphasize external as well as internal
communications so that the R&D Center
operates effectively in an increasingly “open”
environment and achieves related benefits ofsynergy.
Our R&D expenditure for fiscal 2000 totaledNIn every industry andevery market, the pace andmagnitude of structural change ishuge. We have been quick toinitiate restructuring in responseto accelerating change in the
global business environment. Our
goals for the 21st century are to

R&D Expenditure(Billions of yen)react to every change in a flexible
manner and develop new markets

8through constant provision of new
6value. Here is a summary of
4

Nisshinbo’s three-year
management plan, a road map for
further growth.
2

Newly developed polymer-gel
carrier for high-performance
wastewater treatment, a facility
at our new R&D Center (above)0’96 ’97 ’98 ’99 2000

¥7,394 million (US$70 million), up 6.1% over fiscal 1999. As of March 31,
2000, the number of patents held by Nisshinbo was 746, while patentapplications outstanding totaled 1,865. We are expanding the utilizationof such intellectual property.
Higher Added-Value
roduct development is one of the most important designated tasks ofthe three-year plan. Enhancing our product lineup means increasing
added-value. When the business environment undergoes drastic changes,
original products with many potential applications will lead the market. The
key to success is identifying long-term needs in the marketplace andtranslating them into products. A good example of this approach is
ECOSYS28˚C, a high-function summer shirt textile made mainly from SSP
material, having excellent water absorption, air permeation, and deodorizing
capabilities. ECOSYS28˚C was created under the concept of providing
comfort in an office environment where the air-conditioning is set to amoderate 28˚C for energy-saving purposes. The
concept has been well received by consumers,
resulting in steady sales growth. Similarly, we
have commercialized ECOSYS20˚C, acombination of materials for warm winter shirtsthat provides excellent heat-retention capability
in a mildly heated office. Under the same brandnames of ECOSYS28˚C and ECOSYS20˚C, we
have begun to commercialize suits and slacks inorder to increase our presence as a total officewear manufacturer. Other needsmatching, high value-added products
for which we expect strong sales include
the ABS NT series, OIKOS non-woven
all-cotton fabrics, KENAF100GA nonwood fine paper, and EAUDOUCE
water-soluble tissue paper.

P

Materials and Technologies
aving a diverse range of promising materials and technologies is the
key to adding value to Nisshinbo’s products. Among our range ofmaterials, MOBILON in particular has shown outstanding growth.

H

ECOSYS28°C shirt (above,left) and a thermographshowing its “heat-out”
capability (above, right)

MOBILON is a polyurethane
elastomer used in the textile andchemical products fields. In
addition to its use for panty hose,
the applications of MOBILON are
rapidly expanding into theindustrial materials field,
including tapes, bands and films.
Demand is strong both at home and overseas.
Other promising products in the chemical products field are Aqua
Porous Gel (APG) and Bio Contact N (BCN), both incorporatinghydrophilic polyurethane. They
are used for equipment in suchenvironment-related fields as theprocessing of sewerage waterand industrial wastewater. This
market is steadily expanding.
Our recently developed vacuum
insulation panel (VIP) is yet
another promising product. It
utilizes our non-fluorocarbon rigid polyurethane foam technology andprovides a heat-insulation capability double that of conventional
products. Our fiscal 2001 sales target for VIP for application in
refrigerating and freezing facilities is ¥2,000 million, and we are confidentof raising this figure to ¥20,000 million over the next few years.
In the biotechnology field, a market that is expected to grow rapidly,
Nisshinbo offers original DNA-related services. We are preparing for
future growth by accumulating know-how in this field to improve thereliability of our services. Carbon, CCM, secondary batteries, and fuelbattery-related materials are also promising.
Production/Sales System for a
Borderless Market
he three key points relating to accelerating business growth are“taking initiatives in the borderless market,” “establishment of aflexible system within and without the Nisshinbo group,” and “costreduction.” It is from these viewpoints that we are stepping up our efforts
to restructure our organizational and business operations.

T

Bio Contact N has a highwater-absorbing capability(above, right)
A researcher at our new R&D
Center (above, left)

In the textiles segment, in January 2000 we merged the Textile Sales
Division and the Textile Engineering Division into a Textile Division
covering both sales and manufacturing operations. This horizontal
structure enables us to respond to market needs in greater detail andmore quickly. In 1999, we moved the Textile Engineering Division from
Head Office to the Osaka Branch in order to encourage close cooperation
between the two former entities. This resulted in enhanced development
capabilities, reduced inventory, and quicker response to order placement.
Through such measures, we are seeking to counter the effects of an
ongoing increase in textile imports and a generally difficult businessenvironment.
In parallel with the above, we are concentrating on enhancing ourdomestic and overseas production systems from a global viewpoint.
In pursuit of greater operational efficiency, we are reorganizing ourdomestic production facilities. As part of that effort, we will close ourHarisaki and Notogawa plants by July 2002. Some of their facilities will betransferred to other plants, both in Japan and overseas. Although
domestic production capacity will decrease, overseas facilities are
expanding. We are also working on improving production efficiency andproduct quality through the introduction of a flexible operating system
and a shift to multi-product,
small or medium-lot
production. These efforts areintended to strengthen
Nisshinbo’s competitive edgein the global market.
There has been an increasein demand for MOBILON and

P.T. Nikawa Textile Industry(above, left)
Signing ceremony with
Continental Teves AG & Co.
oHG (above, right)

OIKOS in both the textiles andnon-textiles fields. Accordingly,
we plan to increase theproduction capacities of bothproducts. Overseas, we
liquidated a non-profitablesubsidiary in the U.S. On the
production front, Nisshinbo sees Indonesia as its strategic base. P.T.
Nikawa Textile Industry, a spinning company, and P.T. Gistex Nisshinbo
Indonesia, a company engaged in dyeing processing, will undertake
comprehensive production operations to promote the businessdevelopment of materials for shirts and uniforms for the global market.
In the non-textiles segment, we are also accelerating our efforts to
respond to market needs by building a flexible business structure. In theautomobile brakes sector, the Company reached an agreement with
Continental Teves AG & Co. oHG of Germany to establish a new joint
venture, Continental Teves Corporation, by the fall of 2000. The Company
will have a 49% stake in the joint venture, with our German partner
owning the remainder. The sales target after five years of operation is ¥30
billion. The Company and Continental Teves AG & Co. oHG have alreadyestablished a technological tie-up relating to disc brakes and ABS. We
intend to promote the development of next-generation electronic braking
systems, particularly stability control systems, and take an initiative in theintensely competitive world market by developing businesses in Asia, theU.S., and Europe. In July 1999, our joint venture in South Korea, Saeron
Automotive Corporation, started its operations in the supply of friction
materials and powder metallurgy products to the South Korean market.
This was a timely move, in line with a recovery in automobile production

in South Korea, and the new company achieved satisfactory businessresults. At home, we expanded ABS production capacity at the Chiba Plant.
In the machine tools field, which has shown poor business results, werevitalized our General Purpose Machine Tool Group and Customized
Machine Tool Group, clarifying the distinct responsibilities of each. We
are shifting our focus to more marketable products, such as solar
batteries.
In the CCM sector, we have almost completed our domestic sales
network and our domestic market shares are steadily increasing. We are
now keen to advance into the Asian region, specifically the Thai market,
with our Hyper-CHOSHOKU SENKA package.

International Technical Agreements
As licensee:● Meritor Automotive Inc. of the U.K. for commercial vehicle disc braketechnology● Continental Teves AG & Co. oHG of Germany for MK60 ABS and ESP TCS
technology
As licensor:● Rane Brake Linings Limited of India for friction materials technology● Heng Tong Machinery Co., Ltd. of Taiwan for friction materials and passenger
car disc brake technologies
As cross-licensing partners● TMD Friction Beteiligungs GmbH & Co KG of Germany for friction materials
technology● TRW Inc. of the U.K. for drum brake technology● Meritor Automotive Inc. of the U.K. for drum brake technology● Continental Teves AG & Co. oHG of Germany for passenger car disc braketechnology● Continental Teves AG & Co. oHG of Germany for NT20/MK20 ABS and TCS
technologies

Increased Focus on Environmental Issues
The protection of the natural environment has always been and willremain an important task. The days of industrial expansion at theexpense of the environment are over. Nisshinbo, as a total
manufacturer, takes its responsibilities as a corporate citizen
seriously, and concern for the environment is reflected in every aspectof its corporate activities, from product development tomanufacturing.
In April 2000, we published a revised version of the Nisshinbo EarthEnvironment Charter (1993), renaming it the Nisshinbo Environment
Charter. Among other things, the new charter stipulates the need toobtain ISO14001 certification, an international standard forenvironmental management systems, for all our plants and offices.
The development of environment-friendly and recyclable products isimportant in achieving better business results. In relation to recycling,
we developed ECOLOGIA yarns made from recycled PET bottles,
water-soluble EAUDOUCE, biodegradable OIKOS, and KENAF100GA
and TAKEBULKY GA non-wood papers. We are now trying toestablish a textile recycling system, where textile products using ourfabrics are recovered fromapparel manufacturers andretailers and taken to our
Recycling Center. We havealready launched this system foruniforms, and plan to introduce anumber of recovery and recycling
techniques for a variety of
products.
Other environment-friendly
products include the ECOSYS
lineup, hydrophilic polyurethane,and non-fluorocarbon
polyurethane foams. These
products help to save energy,
promote wastewater treatment,
and avoid contamination of the
A book using TAKEBULKY
natural environment, respectively.
GA, made from bambooThe Nisshinbo Group consists of Nisshinbo Industries,
Inc., its 34 subsidiaries, and 12 affiliates. Nisshinbo Industries, Inc.
serves as the core of the group, while group companies are engaged in avariety of operations covering a wide range of regions and businessfields, including textiles, automobile brakes, papers, machine tools,
chemical products, real estate and others. Their activities range fromdevelopment and manufacturing to distribution, sales and marketing.
Their operations are designed to meet the characteristics and market
conditions of each business field.
The ties among group companies are close, providing synergies thatenhance their combined strength in terms of costs, product lineup,
distribution and human resources.

Main Group Companies
Consolidated Subsidiaries
Nisshin Toa Inc.
Ebisu Syokuhu Co., Ltd.
Nisshinbo Mobix Co., Ltd.
Nisshinbo Yarn Dyed Co., Ltd.
Nisshin Denim Inc.
Nisshin Tex Co., Ltd.
Nisshinbo do Brasil Industria Textil Ltda.
Nisshinbo Hong Kong Limited
Nisshinbo Brake Sales Co., Ltd.
Nisshinbo Techno Vehicle Inc.
Nisshinbo Automotive Corporation
Nisshinbo Automotive Manufacturing Inc.
Nisshinbo Somboon Automotive Co., Ltd.
Saeron Automotive Corporation
Tokai Seishi Kougyou Co., Ltd.
Nihon Postal Franker Co., Ltd.
Nisshinbo Urban Development Co., Ltd.
Kansai Nisshinbo Urban Development Co., Ltd.
Nisshinbo Europe B.V.
Ueda Japan Radio Co., Ltd.
Nippon Kohbunshi Co., Ltd.
Nisshinbo Kikai Hanbai Co., Ltd.
Nisshinbo Engineering Co., Ltd.
Nisshinbo Mechatronics Inc.
Kohbunshi (Thailand) Ltd.
Pudong Kohbunshi (Shanghai) Co., Ltd.

Textiles, Food Ingredients, Papers
TextilesTextilesTextilesTextilesTextilesTextilesTextilesAutomobile Brakes
Automobile Brakes
Automobile Brakes
Automobile Brakes
Automobile Brakes
Automobile Brakes
PapersPapers, Chemical Products
Real Estate
Real Estate
Real Estate, Machine Tools
Electronics
Plastic Molded Products
Machine Tools
Chemical Products
Machine Tools
Plastic Molded Products
Plastic Molded Products

Affiliates Accounted for by the Equity Method
Japan Radio Co., Ltd.
Nagano Japan Radio Co., Ltd.
Naigai Shirts Co., Ltd.
Shin-Tech Co., Ltd.
P.T. Nikawa Textile Industry

Electronics
Electronics
TextilesAutomobile Brakes
TextilesR EVIEWO FTEXTILES
In fiscal 2000, ended March 31, 2000, Nisshinbo faced an adverse
business environment in the textile segment due mainly to weak
consumer spending. On a consolidated basis, sales in the textile segment
totaled ¥83,804 million (US$798 million), a decrease of 7.1% from fiscal
1999 and accounting for 36.8% of total consolidated net sales, down 3.0
percentage points. Operating income was ¥763 million (US$7 million),compared with a ¥746 million loss in fiscal 1999.
Sales decreased as a result of the liquidation of Nisshinbo California Inc.
Operating income increased, mainly due to continuing efforts tostrengthen new product development and sales capabilities, a decrease in
the price of raw cotton, and a drive to reduce factory costs and selling,
general and administrative
expenses.
In the yarns field, in the first halfof fiscal 2000 the businessenvironment was favorable. Importlevels were low, and other spinningcompanies reduced their output.
However, sales of yarns remained
stagnant for fiscal 2000 as a wholedue, in part, to competition fromcheap raw cotton and an
appreciation of the yen in thesecond half of the fiscal year. SalesO PERATIONS

and operating income in the specialty
yarns and originally-developed yarns
field increased, as a result of expanded
sales networks for spandex core yarns
and specialty high-twisted yarns.
Sales of knitted products were adversely
affected by an increase in imports.
However, cost reduction activities inboth production and sales contributed to
improved operating income.
In the materials for shirts field, we havefocused intensely on a shift to highvalue-added products, with SUPER SOFT and SSP as the basetechnologies. Exports were disappointing, affected as they were by anappreciation of the yen. In the domestic market sales decreased due tothe increased popularity of low-price products and weak consumer
spending. However, operating income increased, due mainly to highadded-value products, for example ECOSYS28°
C.
Imports increased in the household textiles field. With the exception ofhandkerchiefs and certain other products, shipments and prices fell.
Domestic sales of bedding decreased substantially.
Sales of basic blue denim was up substantially, as was operating income,due to the material’s renewed popularity among young ladies and anincrease in sales to national brands. Sales of other materials for casual
wear were stagnant as a result of competition from low-priced imports.
Sales and operating income of material for uniforms increased due to anincrease in demand for main products and cost down activities in theSales of Textiles(Billions of yen)

Our denim products (above)
appeal to a wide range ofconsumers

Our COMFORT PROPOSAL
direct marketing business offers
high value-added products,
such as those in our prestigious
SUPER SOFT line (above)

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production process.
Domestic demand for MOBILON
spandex for panty hose was weak.
However, sales and operating income
were stable due to a pick up in exports toSoutheast Asian markets.
The high quality and all-cotton
characteristics of our OIKOS non-woven
cotton fabrics have met with a favorable
response from users in numerous fields,
including cosmetics, gauze, surgicalwear, and medical and sanitary products.
Production is being expanded to meetthe extended range of applications.
In our direct marketing business, COMFORT PROPOSAL, SUPER SOFT
products and other products sold well in the first half of fiscal 2000, but along summer, and the consequent shorter autumn season, reduced
consumer spending and so dampened sales in the second half. As aresult, sales and operating income remained at approximately the samelevels as those of fiscal 1999.
On December 7, 1999 the Company liquidated its U.S. subsidiary,
Nisshinbo California Inc., the assets of which were sold to a U.S. textiles
company, Mount Vernon Mills, Inc.
On January 1, 2000, the Company integrated the Textile Engineering
Division with the Textile Sales Division to establish a new Textile
Division, with a view to consolidating production and sales activities.

NON-TEXTILES
Led by satisfactory performances in the automobile brakes, papers,
and real estate fields, sales in the non-textiles segment increased
5.2% over fiscal 1999 to ¥143,648 million (US$1,368 million),
accounting for 63.2% of total consolidated net sales, an increase of
3.0 percentage points.
A U T O M O B I L E

B R A K E S

Sales of automobile brakes
increased to ¥49,442 million(US$471 million), up 23.6%
over fiscal 1999. Operating
income was ¥1,592 million(US$15 million), up ¥1,428
million over fiscal 1999.
Sales and operating incomein the friction materials andautomobile brakes fields
increased, thanks to growthin spot exports of brakeproducts, increased
production and sales by a
subsidiary in the UnitedStates and an increase inSales of Automobile
Brakes(Billions of yen)

An entry at the Annual
Nisshinbo Fashion Contest(above)Our friction materials (above,
upper) and the ABS test course
at our Chiba Plant (above,
lower)

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

R EVIEWO F

orders for friction materials
received from Japanesecustomers by our subsidiaryin Thailand. In July 1999,
we established Saeron
Automotive Corporation inSouth Korea as a joint
venture with Halla Engineering & Construction Corp. Helped by arecovery in the South Korean automobile production, Saeron
Automotive’s sales made a significant contribution to sales andoperating income in this field.
Sales and operating income of ABS increased, despite intensivecompetition, due to increased ABS usage and an increase in thenumber of car models fitted with our ABS products.

O PERATIONS

of raw materials, expanded its range of roll products, and increased
the ratio of high value-added products in its lineup.
Sales of fine paper increased slightly and operating income was up
substantially due to a recovery in orders for printing paper and areduction in factory costs.
Despite expanding our range of products and entering new fields,
sales and operating income were little changed in the specialty
papers field, which includes synthetic paper and fabricatedproducts.
Competition was fierce in the label printing field and sales andoperating income decreased slightly.
O T H E RP R O D U C T S

Sales in this field decreased to ¥62,833 million (US$598 million),
down 4.8% from fiscal 1999. Operating loss totaled ¥973 million(US$9 million), down 8.8%.

P A P E R S
Sales of paper products
totaled ¥27,636 million(US$263 million), up 2.6%
over fiscal 1999. Operating
income increased to ¥1,170
million (US$11 million), a
90.9% increase over fiscal
1999.
Both sales and operating income increased in the household paper
products field. Nisshinbo benefited from the continuing low prices● Machine Tools
Both sales and operating
income in this field
decreased due tostagnant domestic
capital investment, adecrease in sales prices,
and a decrease inincome from overseas

Sales of Papers(Billions of yen)

Our ABS is fitted in the Mazda
PREMACY (above, upper:© Mazda Motor Corporation)
Nisshinbo is a comprehensive
supplier of household paper
products (above, lower)

We are pushing ahead withproduction of manufacturing
equipment for photovoltaic
modules. Above is our solar
simulator to test the electricalperformance of photovoltaic
modules.

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sales as a result of the strong yen.
In December 1999, in order to streamline management andpromote rationalization, Nisshinbo revitalized its General Purpose
Machine Tool Group and Customized Machine Tool Group,
clarifying the distinct responsibilities of each.
● Chemical Products
Sales and operating income
decreased in our mainchemical products line,
polyurethane foams, owing
mainly to reduced demandin the construction andplant engineering
industries. By the end of March 2000, all polyurethane foams
production operations at Nisshinbo’s Tokyo Plant were transferredto the Chiba Plant in order to enhance production efficiency.
Strong demand, and the coming on stream of new production
facilities constructed in fiscal 1999, led to increased sales andoperating income in our polyurethane elastomers business.
In carbon products, sales and operating income increased slightly,
due to a recovery in demand for semiconductors, and sales of new
products.
●Others
Sales in the electronic communications equipment field increased,
while operating income was little changed from fiscal 1999.
Sales of Other Products(Billions of yen)

R E A L

Real estate sales increased to ¥3,737 million (US$36 million), up
3.3% over fiscal 1999. Operating income increased to ¥1,565
million (US$15 million), up 18.6%.
In March 1999, UNY group opened a shopping center on a part ofthe site of the Company’s Shimada Plant, thereby increasing
segment sales.
In Okazaki City, construction is proceeding satisfactorily on a new
shopping center scheduled to open in September 2000. The newcenter is being constructed by the lessee on land owned by
Nisshinbo. It will be integrated with the existing Okazaki shopping
center, the land andbuildings of which are
owned by Nisshinbo, and is
expected to contribute to
the performance of the Real
Estate field in the very near
future.

CCM system display of detailed
input data (above, upper)
Artist’s impression of our new
shopping center in Okazaki(above, lower)

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Sales of Real Estate(Billions of yen)

Polyurethane foams production
facility in our Chiba Plant(above)80

In the Computer Color
Matching Systems (CCM)
field, Nisshinbo focused on
developing new products
and new sources ofdemand, both in Japan andoverseas.

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